The time may be right for Blue Apron Inc., the food startup that has found a niche in the business of same-day fresh grocery delivery, to hit the public markets.
"Last year, the IPO markets were less attractive for technology companies.This year the market seems to have opened up a bit more, so for Blue Apron this is a good opportunity to continue to raise capital to fund their business growth" said Chris Randall, the Managing Director and Partner in the Boston office of LEK Consulting, a global strategy consulting firm. "They are likely looking for valuation based on growth for future earnings."
Bloomberg reported Monday that the New York-based company was in the process of preparing for an initial public offering and was interviewing banks that want to work on the listing. Blue Apron would be valued at $3 billion in an IPO, anonymous sources told Bloomberg. Blue Apron is currently valued at $2 billion after mutual fund giant Fidelity Investments contributed another $135 million in June to fund the company's growing demand.
Co-founded in 2012 by chef Matt Wadiak, Harvard MBA grad Matt Salzberg and former engineer and consultant Ilia Papas, Blue Apron delivers over 8 million meals a month to homes across the United States, according to The New York Times.
"The challenge for consumer technology is to not only create a compelling service but also a compelling brand," commented Tom Forte, Senior Vice President, Senior Consumer & Consumer Internet Analyst at Maxim Group. "Blue apron has created a brand that consumers recognize.
They are providing convenience to consumers and they are doing it capitalizing on the emerging trend that the consumers want to have fresh organic food at home."
Last October, Blue Apron hired Brad Dickerson (formerly the CFO at Under Armour (UA) ) as its chief financial officer.
"I was very impressed by their ability to secure such a talented executive from a company that I so admire. Under Armour has been so successful in building brand and competing against Nike." added Forte.
If the mentioned talks go through, Blue Apron would be the first major food subscription delivery service to go public. The company could not provide any information on the IPO matter at the moment. Its major investor, Fidelity Investments, said they do not comment on individual companies as practice.
A listing for Blue Apron comes as the over-all markets continue to surpass all-time highs and almost a year after its European counterpart, German startup HelloFresh, called off its IPO plan when investors and analysts suggested that the Berlin-based company was not ready for the listing, The Financial Times reported last year.
In recent years, there has been a proliferation of food subscription services that operate on a model of supplying fresh ingredients and original recipes to customers. Celebrities such as lifestyle writer Martha Stewart and famous chef Jamie Oliver have paired up with companies like Marley Spoon and HelloFresh to raise the profile for different brands. Even the New York Times has collaborated with the meal-delivery startup Chef'd to send interested readers meal kits.
The company claims to supply fresher and more affordable groceries than what customers can find at their local supermarkets but it is facing against some tough competitions. Not only have retail giants Walmart (WMT) and Amazon (AMZN) got into the mix of same-day grocery delivery, similar pre-measured meal subscription services like Plated and Purple Carrot are also optimizing their meal kits to appeal to time-strapped customers.
"I think all startups like this seek to go public or get to some exit. An acquisition is definitely viable but Blue Apron now has a rich valuation so the list of possible suitors may be limited." said Sucharita Mulpuru, Chief Retail Strategist at the retail and e-commerce event organizer Shoptalk.